US 10-year borrowing costs pull back from 5% in reprieve for Bessent

Sovereign debt sets the benchmark for borrowing costs for companies and other loans, including household mortgages, and higher rates are broadly viewed as likely to slow economic activity. Michael Metcalfe, head of macro strategy at State Street in London, said yields are getting close to the point where they could unleash a selloff in equities.

"We've seen a very long run of risk-taking activity on the part of investors. So we've had 108 consecutive days of investors adding to risk across assets. And that's literally just broken this week," he said.

Investors are demanding higher returns for holding long-term bonds, rather than shorter-dated debt, to account for the uncertainty around interest rates, inflation and growth.

Bessent has overseen his department's decision to at least double the size of its buybacks of longer-dated securities to at least $4 billion to stem the increase in 30-year Treasury yields, which are at their highest since 2007 and rising.